You see an ad online that says "1965 Mustang, original owner, amazing condition, runs great. $1,000." The price is so good, you buy it sight-unseen. When it arrives you find out it is a 1966, has been owned by a dozen people, is in bad shape, and runs poorly. From a legal standpoint, what is your best option?
Most people think fraud here, but a better course of action is to pursue the seller for breach of warranty. And it doesn't matter if the seller is a merchant or an individual. And for the sake of this discussion the foregoing is a hypothetical. The correct answer is not, "You're stupid to buy a car sight-unseen." I am simply creating a fact-pattern to make a point, something law professors often do. I have handled quite a few cases where sellers made false statements about the goods they were selling but they are all different so it is easier to use a simple fact pattern for illustration purposes.
If using a hypothetical bothers you, click here and watch this compilation of funny puppy videos instead. One of the dogs works a turntable!
For those still here, this is why Warranty claims are more useful than Fraud claims. An express warranty, according to the law in most states, is "any description of the goods which is made part of the basis of the bargain." There are a few other examples of warranties but this is the most common. Of the statements in the ad above, several of them are warranties. The year, model, and number of owners are all descriptions of the car which might be part of the basis of the bargain to a typical buyer.
The same law states that a seller is not liable for statements "merely of the value of the goods" or of statements which are clearly "the seller's opinion or commendation of the goods." This category of statement is often referred to as sales puffery. You cannot sue a salesman for making subjective statements about the goods such as "This is a great car." "$1,000 is a fair price for this car." "This car will not disappoint you." Ask yourself if the statements are objective – that is, are they measurably true or false.
"Yesterday's high in Detroit was 68 degrees."
"Yesterday, it was hot in Detroit."
The first is objective in that it can be measured, checked and determined to be true or false. The second is clearly a matter of opinion. Suppose it was 68 degrees in Detroit yesterday; is that "hot"? Maybe not to someone who lives in Central America.
So getting back to the Mustang, which statements are measurable?
- Original owner
If the car turned out to be a two-owner, 1966 Pinto, there would be three objectively false statements about the goods, and all of them would be actionable under the law as breached warranties.
The statements "amazing condition" and "runs great" are not actionable since they are subjective and would be considered sales opinions or commendation of the goods.
Why this is important:
- The seller does not need to tell you they are giving you "warranties" for statements like "1965 Mustang" and "original owner" to be actionable. If they make the statements, they are on the hook for them.
- You do not need to show that the seller meant to breach the warranty or even that they knew they were making false statements. You only need to show that the statements were made and that they were false.
In other words, "I thought it was a 1965 Mustang" is not a defense to the seller. This standard is much easier to prove than the standards for fraud (which require you to prove the intent of the fraudster along with some other technicalities which make fraud claims harder to pursue).
All of this is true if you want to chase them in small claims court by yourself or with a lawyer in regular court. And, if you really want to you can probably also sue the seller for fraud. Most states allow you to plead them both and see what happens in court. If your state allows for punitive damages for fraud it might be worth a shot if the case is egregious enough. Just remember that a breach of warranty claim can be a slam dunk while the fraud claim can turn into a mind-reading exercise.
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Steve Lehto has been practicing law for 23 years (and taught law for 10), almost exclusively in consumer protection and Michigan lemon law. He wrote The Lemon Law Bible. He also wrote Chrysler's Turbine Car: The Rise and Fall of Detroit's Coolest Creation. You can hear his podcast Lehto's Law on iTunes here.
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